Boeing to Build New 7E7 Jetliner in Seattle Region

Months of uncertainty for the Seattle region ended Tuesday as Harry C. Stonecipher, the chief executive of Boeing, stood on a stage here and announced to the thunderous cheers of Boeing employees, ''The 7E7 will be built right here in Puget Sound.''

The 7E7 jetliner, a medium-range aircraft, is Boeing's first new plane in more than a decade. That the news was positive and announced in Seattle, Boeing's birthplace, serves as a balm on the still fresh wounds created here when the company moved its headquarters to Chicago in 2001. It is also good news for Boeing employees in Puget Sound, which until as recently as 1996 accounted for the majority of Boeing's work force but now count for only a third. Since 2001, Boeing has eliminated 30,000 jobs locally.

''This is the best news we have heard in a long time,'' said Mark Blondin, president of the Machinists District 751, which represents about 15,600 Boeing workers. ''It was the right decision for our members, for Boeing and for the State of Washington.''

Boeing executives estimated the market for the 7E7 would be as large as 3,500 aircraft, worth $400 billion.

Alan R. Mulally, president of Boeing Commercial Airplanes, said the company was encouraged by stronger traffic in Asia, hit hard earlier this year by the SARS virus, and by an improved mood among travelers in the United States as formal conflict in Iraq ended.

''Making progress in Iraq and the war on terrorism is having a calming effect on business travel and leisure travel,'' Mr. Mulally said. Further, the company thinks air travel could return to the record levels of the year 2000 by the end of next year, he said, and that travel would continue to improve in 2005 and 2006.

Nonetheless, the company does not have any firm orders for the plane, although at least 50 airlines have told the company they are interested in the 7E7, including the two big Japanese carriers, All Nippon Airlines and Japan Air Lines, Mr. Mulally said. ''There is no disappointment that we do not have a customer here today,'' he said.

Analysts have said Boeing needs orders for 150 to 200 aircraft before it approves production. But Mr. Stonecipher noted Boeing started production of two aircraft lines, the 737, used on short flights, and the 777, used for longer flights, with just one order each.

''The only way this airplane wouldn't go is if no one ordered them,'' Mr. Stonecipher said.

Boeing's optimism was not universally shared. This year, airlines are set to report their weakest revenues per available seat mile, the industry's standard measurement, in the history of commercial aviation. Kevin P. Mitchell, chairman of the Business Travel Coalition, which represents business travelers and corporate travel departments, said Boeing executives were much too bullish about the industry's recovery.

''He's continuing to whistle by the graveyard with a bounce in his step,'' Mr. Mitchell said of Mr. Mulally's forecast of a return to record travel. ''There is little evidence out there that business travel demand will reach 2000 levels any time in the next several years. I don't see it.''

The uncertainty with which public officials here awaited Boeing's decision on whether and where to develop the 7E7, known as the Dreamliner, is a far cry from the era when Seattle was the unchallenged home to the uncontested king of commercial aviation. The company and the region's political establishment benefited from an unsullied symbiotic relationship, as Senator Henry Jackson was famously tagged the ''senator from Boeing.''

The state estimates the 7E7 will provide 1,200 production jobs and as many as 3,400 support jobs at Boeing by 2015 and an additional 12,700 jobs across the state.

That is expected to pump an additional $65 million into the state's coffers annually.

According to state economists, the aerospace industry in Puget Sound already generates $700 million in tax revenue every year.

But it is perhaps Everett, north of Seattle, where Boeing assembles the 747, 767 and 777, which will benefit the most from the 7E7. The town has strong Boeing ties. When the first 747 rolled off the line there in 1968 it was named the ''City of Everett.''

Everett has suffered under the company's job cuts, said Louise Stanton-Masten, president and chief executive of the Everett Chamber of Commerce.

''This is just a real morale booster for all of us who have been waiting for Boeing's decision,'' she said.

Michael Bair, senior vice president in charge of the 7E7, said it was Boeing's Everett site at Paine Field and a skilled work force that convinced he and the board.

Mr. Stonecipher said his enthusiasm for the project mushroomed when he traveled to Seattle on Dec. 2, to visit Boeing's engineering center and see its proposed production site in Everett. ''I came down solidly behind it by the time I left here,'' he said.

The effort to woo the 7E7 was considerable, and included everyone from senators to local chamber of commerce officials. Gov. Gary Locke and the state legislature passed $3.2 billion in tax incentives and made investments in education and transportation infrastructure requested by the company.